Asian stocks rise, offers some light for JSE

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The JSE in Johannesburg. Photo: Gallo Images/Getty Images/File
The JSE in Johannesburg. Photo: Gallo Images/Getty Images/File

BUSINESS


The JSE closed in positive territory on Monday with financials and resources sectors leading the gains to close at 69 211.76. The All Share index was 0.82% higher, resources were up 1.53% while financials gained 1.26%.

Wall Street ended up with mixed bag after a choppy trading session on Monday with investors keeping a watch on the inflationary impact of retail sales figures expected in US today.

The Nasdaq lost 1.20% to 11 662.79 while the the S&P 500 closed in the red to 4 008.01. The Dow Jones Industrial Average was a fraction in the green to 32 223.42

European markets were on the back foot on Monday as concerns regarding rising inflation and lower global growth remain.

The FTSE 100 closed in the green after gaining 0.63% to 7 464.80

The DAX lost 0.45% to 13 964.38

And the CAC40 was down 0.23% to 6 347.77

Asian stocks were up on Tuesday despite a lukewarm lead from Wall Street. Negative economic data from China as a result of the country’s zero-Covid-19 policy that resulted in continued lockdowns added to inflation concerns.

The Nikkei was up 0.43% to 26 660.

Shanghai Composite gained 0.39% to 3 085.64

The Hang Seng was up sharply on Tuesday morning, it gained 2.66% to 20 481.

The rand clawed back some of its losses in overnight trade gaining 0.33% against the US dollar to R16.09 on Tuesday morning.

It was weaker against the British Pound at R19.84 and R16.79 against the euro.

Chief Investment Officer at Benguela Global, Zwelakhe Mnguni said:

Since April 2021, the dollar has gained 11% against the euro and 12% against the Japanese yen in just six weeks. The current surge in dollar strength is almost certainly due to anticipation of a more aggressive US monetary policy in comparison to the eurozone and Japan.

“China’s Covid-19-based limitations have depressed commodity demand, weakening commodity currencies throughout the world. Because of the significant Chinese links to the South African commodities environment, the rand is particularly vulnerable.”

The inflationary impact of the recent surge in the oil price and the weakness of the rand will be some of the key factors the Reserve Bank’s Monetary Policy Committee (MPC) will be considering as it meets to consider its next move on interest rates.

South Africa’s consumer price inflation is expected to remain unchanged in April after it rose 5.9% in March to the upper limit of the central bank’s target band. The MPC is expected to hike interest rates by 50 basis points on Thursday.

Chief Economist at Investec, Annabel Bishop said: “We expect CPI inflation will remain unchanged in April at 5.9% year-on-year, the outcome could be fractionally lower barring heady medical expenses. SA’s targeted measure of inflation is still in target, but likely to remain around 6% year-on-year in Q2.”

With Brent crude trading at $113.84 per barrel, South African motorists should brace for another increase in the petrol price in June.

“While it’s too early to precisely assess what June’s fuel price moves will be although the R1.50 a litre cut in the fuel levy will wear out by then. In addition a very large hike from the recent rand depreciation and international oil prices of R1.98 a litre is building, which could see a huge unprecedented price increase if government does not bring in more measures to alleviate the price increase, potentially cuts in the retail margin given the cost of suspending R1.50 a litre in the fuel levy,” Bishop said.

The gold price was trading at $1 825 an ounce.

While silver was at $21.60 an ounce.


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